OCFO presents 10-year forecast showing pension and debt trajectory; committee receives report

The Office of the Chief Financial Officer (OCFO) presented a long-term forecast on legacy pension obligations and debt service and the Budget, Finance & Audit Standing Committee voted to receive and file the OCFO’s report (line 7.22).

OCFO staff described a multi-decade funding plan that uses a combination of General Fund appropriations, a retired-protection fund and recurring contributions from partner foundations. The presentation showed how payments to legacy pension plans are scheduled to decline as the city applies a level-principal repayment method and shifts more of the obligation to the General Fund over time.

According to the OCFO presentation, the retired-protection fund was built through fiscal 2023 with roughly $455,000,000 in contributions and earnings and has been used beginning fiscal 2024 to help cover pension payments. For fiscal 2026 the budgeted plan shows approximately $82,000,000 coming from the General Fund and a planned draw of about $72,000,000 from the retired-protection fund to meet an estimated $173,000,000 obligation that year.

The OCFO also summarized the city’s long-term debt picture, including voter-authorized unlimited tax general obligation (UTGO) bonds and limited-tax general obligation debt. The presentation noted the general-fund debt service plus legacy pension payments account for roughly $154,000,000 in fiscal 2026, approximately 10% of the city’s General Fund budget as presented to the committee.

Financial staff walked the committee through upside and downside revenue scenarios over a 10-year horizon: an upside driven by major development projects and potential increases in internet gaming revenue, and a downside that could occur if development revenue does not materialize or if state revenue-sharing or other assumptions are reduced. The OCFO reiterated the city’s statutory requirement to maintain a 5% rainy-day fund and noted the city currently holds about $150,000,000 in reserves.

Committee members asked about benchmarking, best practices for rainy-day funds and the effect of market volatility on pension investments. OCFO staff and Legislative Policy Division analysts suggested relying on published benchmarking reports and rating-agency metrics and noted that pension investment committees use diversified asset allocations and loss-smoothing policies to cushion short-term market volatility.

The committee voted to receive and file line item 7.22; no roll-call vote was recorded in the transcript.